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Protection Is Cheap After Vote, Fed Move

By

Brendan Conway

Updated Nov. 5, 2010 12:01 a.m. ET

NEW YORK—Stocks are soaring, and that gives options traders who doubt the rally a window to hedge inexpensively.

Many investors loaded up on portfolio protection leading into the midterm elections and the Federal Reserve's well-telegraphed quantitative easing. When both events largely met expectations, the prices of protective options fell sharply.